Energy, Ireland and the EU: an interconnected future
WHAT’S HAPPENING?
The viability of the combined, single energy market in the Republic of Ireland and Northern Ireland is under question.
KEY INSIGHTS
– A proposed ‘Celtic Interconnector’, which will connect Ireland and northwest France, could be seen as the first steps in securing – and securitising – the Republic of Ireland’s connection to the EU.
– Brexit will end the UK’s need to abide by EU regulations in the event of a gas or oil shortage.
– Irish and EU policymakers will have to establish contingency plans to ensure Ireland’s protection against energy shortages.
The United Kingdom’s (UK) exit from the EU creates significant uncertainty for the economic cooperation and infrastructure linkages between the Republic of Ireland (ROI) and Northern Ireland (NI). Thus, it wasn’t unexpected that the relationship between the UK and the ROI received unique attention in the final months of 2017, as the first stages of UK-EU negotiations were being finalised. However, as the latter half of 2017 unfolded – revealing a very different UK political landscape – new potential issues have arisen. Although Brexit will almost certainly not immediately end the island’s current energy agreement, concerns remain about Brexit leading to a drift of British policy away from EU standards, making the arrangement difficult to maintain.
A report published on December 8, which outlined progress made by the negotiating parties in Brexit talks, provided distinct provisions on how the 499km Irish border will be interpreted. Although issues around border control have not been resolved, the report makes clear that the 1998 Good Friday Agreement – which outlines provisions for an open border – must be protected. This position respects guiding principles set out in a September 6 report, tabled by the European Commission. Although much attention has been paid to concerns for the Irish border and trade relations, other Irish challenges exist for policymakers. One such example is the island’s energy sector.
Beginning in 2007, the ROI and NI have operated a single electricity market. Established by respective national legislation in Westminster and the Oireachtas in Dublin, the Single Electricity Market (SEM) has produced a competitive system that has driven down the price of electricity for the people of the ROI and NI and increased the reliability of supply.
THE CURRENT IRISH ELECTRICITY LANDSCAPE
During the early years of the combined market, NI produced the larger supply of energy going into the market but these days NI imports 15% of its total energy used from the ROI. This deficit in production is expected to continue and NI will steadily require increasing levels of electricity from the ROI.
The ROI now produces a surplus of electricity for the SEM. However, about 46% of this electricity is generated through natural gas – 85% of which is supplied to the ROI by the UK. In the unlikely event of a shortage of gas for electricity generation, the ROI would rely on the UK to supply additional resources.
Following Brexit and in light of this systemic power imbalance, the market poses a risk for international tension if not considered in future Brexit negotiations or the concluding deal. However, as the SEM was negotiated by a bilateral agreement, Brexit will only lead to the discontinuation of the framework if specific clauses in a final deal undermine it. Regardless, given the uncertainty of Brexit, policymakers in London, Dublin, and Brussels will need to work collaboratively to ensure consistent and adequate supply of energy to the ROI and NI.
THE FUTURE OF THE EU AND IRELAND: INTERCONNECTION AND SECURITISATION
Throughout Brexit, the Irish government has prioritised tangible connections to the EU. The current Minister for Communications, Climate Action and Environment, Denis Naughten, TD, confirmed this when he stated that “it is important that [Ireland] have direct connections into the EU and we are determined to make sure that happens.” This position, too, makes sense for EU policymakers, who are trying to ensure the future security of a member state.
In response to this need, the Irish electricity network underwent a significant change in October 2017, as it began the shift away from the Single Electricity Market (SEM) to an Integrated Single Electricity Market (I-SEM). This will eventually allow the free trade of electricity from the ROI and NI to mainland Europe. The change has been accompanied by a European Commission (EC) grant worth €4 million, to explore the creation of a proposed “Celtic Interconnector”. The interconnector would connect Ireland to mainland Europe – and therefore its single electricity market – through a 600km subsea cable to northwest France. This interconnector – to be one of the longest in the world – will allow the import and export of power to supply the equivalent of 450,000 homes.
Ultimately, this interconnector can be seen to have deep symbolic meaning as well as its obvious substantial benefits for the Irish people. The securing and securitising of Irish electricity supply through such an interconnector provides the ROI with a tangible alternative to reliance upon the UK in a post-Brexit future.
SUBSTANTIAL EMERGING RISKS: POTENTIAL TENSION
Although securitising electricity supply to the island is an important EU goal, doing so could provoke international tension. One such example of how the SEM could be harmful to Irish-British relations is the cost of electricity production. If the UK does not join the European Economic Area (EEA) when it leaves the EU, it will be free to set its own price on the sale of natural gas, and would not be restricted by EU regulation on how electricity is produced.
Such an outcome would echo Switzerland’s attempts to join the EEA. Following negotiations to accede to the EEA, Switzerland saw its attempts to join the collective European energy market halted by a 2014 referendum on migration – the same issue that formed a major part of the pro-Brexit campaign.
If the UK doesn’t join the EEA it would be free from EU agreements on a set price for carbon and could decide on a natural gas price lower than the agreed EU price. This could have a negative impact on the ROI economy, because – despite the cheaper price of natural gas available through the SEM interconnector – the ROI would still be bound by EU regulations on the amount of energy that has to be produced through renewable sources. The price of electricity would be cheaper for the entire island, but only because the UK could begin to supply the market with cheaper electricity from non-renewable sources. Meanwhile, Irish energy producers would become uncompetitive within their own market.
Conversely, if the UK increased the cost of natural gas to above the EU level, the cost of energy to the consumer in the ROI and NI would increase, unless government subsidies were put in place to offset the increase in price to the consumer. The ROI would still be forced to meet EU mandated levels of renewable energy production, but would also be dependent upon natural gas from the UK to generate electricity. As such, the cost of electricity would likely increase overall.
Regardless of the UK’s policies following its withdrawal from the EU, the UK and the ROI could have competing interests in energy production. Foreshadowing this situation, policies being implemented by the EU to remove the ROI’s reliance on its interconnector with NI for power supply are significant. These policies provide both a tangible and metaphorical link between the EU and the ROI, possibly suggesting changes to the make-up of Europe following Brexit. Regardless of the future of the existing Ireland interconnector, it is plausible to conclude that the proposed ‘Celtic Interconnector’ could be moving the ROI and the EU towards a unified future.
